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Additionally, we note that 2 years after section 465(a)(1)
was amended to eliminate the at-risk limitations for S
corporations,7 section 465(b)(3)(B)(ii) was added to the Code by
DEFRA section 432(c). The logical inference, therefore, is that,
because the at-risk status of an S corporation is no longer
relevant, where section 465(b)(3)(B)(ii) addresses the at-risk
status of a corporation borrowing from its shareholders, the
statute must refer only to C corporations that are subject to
section 465.
For the reasons stated above, we simply are not persuaded by
petitioners' arguments or their interpretation of the statute.
Accordingly, we hold that, because the source of the funds
constituting the loan is not excepted by section
465(b)(3)(b)(ii), petitioner, pursuant to section 465(b)(3)(A),
is not considered to be at risk with respect to the loan.
7 Previously, with respect to S corporations, the at-risk
limitations of sec. 465(a)(1) applied at both the corporate and
the shareholder level. Sec. 5(a)(31)(A) of the Subchapter S
Revision Act of 1982, Pub. L. 97-354, 96 Stat. 1669, 1695,
however, amended sec. 465(a)(1) by eliminating the at-risk
limitations for S corporations. See also H. Rept. 98-432 (Part
2), at 1507 ("In the case of a[n] * * * S corporation, the [at-
risk] rules apply at shareholder level."), 1507 n.16 (The at-risk
"provisions no longer apply at the corporate level as a result of
an amendment made by the subchapter S Revision Act of 1982 (Pub.
L. 97-354)" (1984).
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